Mining
Volatile Returns: Commodity Investing Through Miners and Explorers
Volatile Returns: Commodity Investing Through Miners
Investors consider gold and silver as safe haven investments. But the companies that produce gold and silver often offer volatile returns, creating opportunities for astute investors.
Volatility is a double-edged sword, particularly when it comes to commodity investing. During the good times, it can create skyrocketing returns. But during bad times, it can turn ugly.
Today’s infographic comes to us from Prospector Portal, and shows how investing in precious metals equities can outperform or underperform the broader metals market.
Capitalizing on Volatility: Timing Matters
Just like most investments, timing matters with commodities.
Due to the complex production processes of commodities, unexpected demand shocks are met with slower supply responses. This, along with other factors, creates commodity supercycles—extended periods of upswings and downswings in prices.
Investors must time their investments to take advantage of this volatility, and there are multiple ways to do so.
Three Ways to Invest in Commodities
There are three primary routes investors can take when it comes to investing in commodities.
Investment Method | Benefits | Limitations |
---|---|---|
Direct physical investment |
|
|
Commodity futures |
|
|
Commodity-related equities |
|
|
Among these, commodity-related equities offer by far the most leverage to changes in prices. Let’s dive into how investors can use this leverage to their advantage with volatile metal prices.
The Fundamentals of Investing in Mining Equities
When it comes to commodity investing, targeting miners and mineral exploration companies presents fundamental benefits and drawbacks.
As metal prices rise, the performance of mining companies improves in several ways—while in deteriorating conditions, they do the opposite:
Category | Rising Commodity Prices | Falling Commodity Prices |
---|---|---|
Outlook | - Improved outlook | - Deteriorated outlook |
Stock Price Movement | - Equity growth | - Equity decline |
Dividend Payouts | - Increased dividends | - Decreased dividends |
Financial Performance | - Increased earnings | - Decreased earnings |
With the right timing, these ups and downs can create explosive opportunities.
Mining companies, especially explorers, use these price swings to their advantage and often produce market-beating returns during an upswing.
But how?
The Proof: How Mining Equities React to Metal Prices
Not only do price increases translate into higher profits for mining companies, but they can also change the outlook and value of exploration companies. As a result, investing in exploration companies can be a great way to gain exposure to changing prices.
That said, these types of companies can generate greater equity returns over a shorter period of time when prices are high, but they can also turn dramatically negative when prices are low.
Below, we compare how producers and exploration companies with a NI-43-101 compliant resource perform during bull and bear markets for precious metals.
All figures are in U.S. dollars unless otherwise stated.
Mining Company | Company Stage | Primary Metal Produced | Market Cap. Oct 31, 2019 | Market Cap. July 29, 2020 | Bull Market Performance (Nov. 1, 2019-July 29, 2020) | Bear Market Performance (Jan 02 – Dec 31, 2018) |
---|---|---|---|---|---|---|
Banyan Gold | Exploration/ Development | Gold | $6M | $40M | 500% | -44% |
Renforth Resources | Exploration | Gold | $8M | $10M | 11% | -10% |
Auryn Resources | Exploration | Gold, Copper | $181M | $330M | 60% | -39% |
Wesdome Gold Mines Ltd. | Production | Gold | $1,104M | $1,885M | 68% | 110% |
Monarch Gold | Exploration/ Development | Gold | $57M | $148M | 139% | -23% |
Red Pine Exploration | Exploration | Gold | $13M | $22M | 29% | -55% |
Revival Gold Inc. | Exploration/ Development | Gold | $27M | $74M | 113% | 5% |
Erdene Resource Development | Exploration/ Development | Gold | $36M | $111M | 222% | -56% |
Endeavor Mining Corp. | Production | Gold | $2,622M | $5,874M | 54% | -13% |
Yamana Gold Inc | Production | Gold | $4,572M | $8,279M | 87% | -22% |
During the bear market period, the price of gold declined by 2.66%, and despite engaging in exploration activity, most companies saw a slump in their share prices.
In particular, exploration companies, or juniors, took a heavier hit, with returns averaging -31.66%. But even during a bear market, a discovery can make all the difference—as was the case for producer Wesdome Gold Mines, generating a 109.95% return over 2018.
- Average returns for gold producers including Wesdome: 24.83%
- Average returns for gold producers excluding Wesdome: -17.65%
During the bull market period for gold, gold mining companies outperformed the price of gold, with juniors offering the highest equity returns averaging 153.43%. Gold producers outperformed the commodity market, the value of their equities increased 69.61%—less than half of that of exploration companies.
Silver: Bears vs Bulls
Similar to gold mining companies, performances of silver producers and explorers reflected the volatility in silver prices:
Company | Company Stage | Primary Metal Produced | Market Cap. Oct 31, 2019 | Market Cap. July 29, 2020 | Bull Market Performance (Nov. 1, 2019-July 29, 2020) | Bear Market Performance (Jan 02 – Dec 31, 2018) |
---|---|---|---|---|---|---|
Silvercrest Metals | Exploration | Silver | $694M | $1,449M | 78% | 117% |
Pan American Silver | Production | Silver | $2,973M | $10,550M | 125% | 1% |
Golden Minerals | Exploration | Silver | $30M | $80M | 80% | -42% |
Americas Gold and Silver | Production | Silver | $335M | $482M | 10% | -56% |
Dolly Varden Silver Corp. | Exploration | Silver | $28M | $74M | 152% | -32% |
Endeavour Silver | Production | Silver, Gold | $458M | $837M | 72% | -10% |
During the bear market period for silver, its price decreased by 9.8%. Explorers and producers both saw a dip in their share prices, with the equity of silver producers decreasing by 21.63%.
However, the discovery of a high-quality silver deposit again made the difference for SilverCrest Metals, which generated a 116.85% return over the year.
- Average returns for silver exploration companies including SilverCrest: 8.32%
- Average returns for silver exploration companies excluding SilverCrest: -27.86%
On the other hand, during the bull market period, the price of silver increased by 34.33%. Silver exploration companies surpassed the performance of the price of silver.
- Average returns for silver producers: 69.04%
- Average returns for silver exploration companies: 95.36%
The potential to generate massive returns and losses is evident in both cases for gold and silver.
The Investment Potential of Exploration
Mining equities tend to outperform underlying commodity prices during bull markets, while underperforming during bear markets.
For mining exploration companies, these effects are even more pronounced—exploration companies are high-risk but can offer high-reward when it comes to commodity investing.
To reap the rewards of volatile returns, you have to know the risks and catch the market at the right time.
Mining
Visualizing the New Era of Gold Mining
This infographic highlights the need for new gold mining projects and shows the next generation of America’s gold deposits.


Visualizing the New Era of Gold Mining
Between 2011 and 2020, the number of major gold discoveries fell by 70% relative to 2001-2010.
The lack of discoveries, alongside stagnating gold production, has cast a shadow of doubt on the future of gold supply.
This infographic sponsored by Novagold highlights the need for new gold mining projects with a focus on the company’s Donlin Gold project in Alaska.
The Current State of Gold Production
Between 2010 and 2021, gold production increased steadily until 2018, before leveling and falling.
Year | Gold Production, tonnes | YoY % Change |
---|---|---|
2010 | 2,560 | - |
2011 | 2,660 | 3.9% |
2012 | 2,690 | 1.1% |
2013 | 2,800 | 4.1% |
2014 | 2,990 | 6.8% |
2015 | 3,100 | 3.7% |
2016 | 3,110 | 0.3% |
2017 | 3,230 | 3.9% |
2018 | 3,300 | 2.2% |
2019 | 3,300 | 0.0% |
2020 | 3,030 | -8.2% |
2021 | 3,000 | -1.0% |
Along with a small decrease in gold production from 2020 levels, there were no new major gold discoveries in 2021. Meanwhile, annual demand for the yellow metal increased by 10%, up from 3,651 tonnes to 4,020 tonnes.
The fall in production and long-term lack of gold discoveries point towards a possible imbalance in gold supply and demand. This calls for the introduction of new gold development projects that can fill the supply-demand gap in the future.
Sustaining Supply: Gold For the Future
Jurisdictions play an important role when looking for projects that could sustain gold production well into the future.
From political stability to trustworthy legal systems, the characteristics of a jurisdiction can make or break mining projects. Amid ongoing market uncertainty, political turmoil, and resource nationalism, projects in safe jurisdictions offer a better investment opportunity for investors and mining companies.
As of 2021, seven of the top 10 mining jurisdictions for investment were located in North America, according to the Fraser Institute. Here’s a look at the top five gold-focused development projects in the region, based on measured and indicated (M&I) gold resources:
Project | M&I Gold Resource, million ounces* | Grade (grams/tonne) | Location |
---|---|---|---|
KSM | 88.4Moz | 0.51g/t | British Columbia 🇨🇦 |
Donlin Gold** | 39.0Moz | 2.24g/t | Alaska 🇺🇸 |
Livengood | 13.6Moz | 0.60g/t | Alaska 🇺🇸 |
Côté Gold | 13.6Moz | 0.96g/t | Ontario 🇨🇦 |
Blackwater | 11.7Moz | 0.61g/t | British Columbia 🇨🇦 |
*Inclusive of mineral reserves. **See cautionary statement regarding Donlin Gold’s mineral reserves and resources.
Located in Alaska, one of the world’s safest mining jurisdictions, Novagold’s Donlin Gold project has the highest average grade of gold among these major projects. For every tonne of ore, Donlin Gold offers 2.24 grams of gold, which is more than twice the global average grade of 1.03g/t.
Additionally, Donlin Gold is the second-largest gold-focused development project in the Americas, with over 39 million ounces of gold in M&I resources inclusive of reserves.
Novagold is focused on the Donlin Gold project in equal partnership with Barrick Gold. Click here to learn more now.

-
Automotive4 hours ago
The Most Fuel Efficient Cars From 1975 to Today
This infographic lists the most fuel efficient cars over the past 46 years, including the current leader for 2023.
-
Technology2 days ago
Ranked: The Top 50 Most Visited Websites in the World
In this visualization, we rank the top 50 websites that receive the most internet traffic, from Google to CNN.
-
Markets3 days ago
Charted: The Dipping Cost of Shipping
After a dramatic spike during the pandemic, shipping costs have now fallen back to Earth. What does that mean for shippers and the economy?
-
VC+6 days ago
Access Our Exclusive Report and Upcoming ‘2023 Global Forecast’ Webinar on VC+
See what the beginning of 2023 may hold, starting with our Global Forecast Report which summarizes hundreds of expert predictions.
-
Energy1 week ago
Visualizing China’s Dominance in Battery Manufacturing (2022-2027P)
This infographic breaks down battery manufacturing capacity by country in 2022 and 2027.
-
Politics1 week ago
Which Countries are the Most Polarized?
This chart plots polarization for various countries based on the Edelman Trust Institute’s annual survey of 32,000+ people.
-
Markets2 weeks ago
The Biggest Global Risks of 2023
-
Markets4 weeks ago
Top Heavy: Countries by Share of the Global Economy
-
Politics1 week ago
Visualizing the World’s Top 25 Fleets of Combat Tanks
-
Money4 weeks ago
U.S. Inflation: How Much Have Prices Increased?
-
Energy1 week ago
The Periodic Table of Commodity Returns (2013-2022)
-
Misc3 weeks ago
Infographic: The Longest Lasting Cars, in Miles
-
Politics1 week ago
Which Countries are the Most Polarized?
-
Markets3 weeks ago
The U.S. Stock Market: Best and Worst Performing Sectors in 2022